The Ultimate Framework for Identifying the Highest-Quality Airdrops Part 2/2

If you haven’t read Part 1 make sure you do so, even if you are not a premium subscribers you can read the first half of the post for free

3/ On-chain task types

The volume of transactions is important, but the quality of transactions is even more crucial.

When someone misses out on an airdrop, it's often attributed to a "skill issue," and there is some truth to that.

Higher-quality transactions generally involve a greater barrier to entry, requiring more advanced DeFi knowledge and deployed capital to execute effectively.

As an airdrop hunter, you might engage in the following types of transactions, ranked by quality:

• Daily check-ins to protocols

• Swaps

• Bridging

• Minting NFTs/LSTs

• Lending, Borrowing, Yield Protocols

• Liquidity Provision (LP-ing)

• Trading perps and using leverage

The reason trading perps is considered the highest quality is due to its inherent unpredictability, risk, and potential to lose capital. Most farmers incur significant losses from trading perps just from fees alone, even if you are technically correct on a trade (Orderly is the best example of this). 

One of the best ways to reduce your risk is to “hedge” by taking the opposite position on a second account (long ETH on account #1 then short ETH at a similar size and current on account #2.

Be warned that projects have systems in place to detect and remove/disqualify wallets/users trying to abuse interactions like this in wash trading (opening and closing a trade generally under 5 minutes) or if you have these wallets connected to another on-chain in some way.

I personally hate trading on perps to farm points due to the high time cost and active management required to manage positions (unless the platform allows you to set tight limit orders).

The second “quality” interaction and the one I prefer by far is LPing (providing capital/liquidity).

Regardless of your opinion on how the ZK airdrop was conducted, it created a new meta/paradigm shift in the types of actions projects are now incentivizing and rewarding, which is a time-weighted balance of your funds on chain.

Basically, the more “useful” capital you have on chain (LP ranging within active price range) + more time those funds are deployed = more points / larger airdrop 

The Arbitrum-style of airdrops (having X amount of total transactions or unique contract interactions) will no longer be valid due to the market becoming more efficient with the awareness and skill of the average farmer coupled with the ease of access to retail friendly automation tools and products (like Zenith). 

Liquidity plays a crucial role in a network's success, so rewarding users for "risking" their funds through deposits makes sense.

However, as demonstrated by the Scroll campaign, not all liquidity positions are valued equally.

Two factors determine the quality of a liquidity position:

• Usefulness: A position that is more concentrated and close to the actual price is deemed more useful.

• Volatility: Positions with higher volatility (e.g., ETH-USDC) are considered higher quality compared to those with lower volatility (e.g., USDC-USDT or ETH/stETH).

Bots can easily spam lower-quality transactions like daily check-ins or swaps. But depositing funds into liquidity pools or lending-borrowing platforms requires substantial capital across multiple wallets.

For this reason, I prefer maintaining 1-5 highly quality wallets that qualify for every airdrop rather than managing a large multitude of 20+ wallets, as without automation, the greatly increased time costs make the risk reward significantly less appealing than it was 1+ years ago.

4/ Fees incurred

You will often see complaints about Scroll’s high gas fees despite being nearly 70% cheaper than the fees before the Dencun upgrade.

High fees can deter bots and create a higher barrier to entry for users, which might explain why something like the AlienX mainnet campaign had only 7,000 participants.

That said, not all high-fee protocols are worth interacting with. Some, like @Orbiter_Finance and @CryptoRubic, have fees that seem excessive, are continuously extending their points campaigns, and don’t seem to have any correlation that a better airdrop will be proportional to more feed spent.

In some cases, high fees can turn a campaign into a competition where the highest spender wins, as seen with deBridge.

With gas fees consistently below 10 gwei (often below 1),  now is a great time for engaging with airdrop projects on ETH mainnet. You might also consider building out your ETH mainnet interaction to mint something like a DegenScore Beacon SBT to enhance your on-chain reputation.

High fees or having your wallet rank be highly correlated to the amount of fees spent can discourage many wallets from engaging with the project, which may lower the competition and potentially increase your token allocation.

5/ Ease of bridging to new chains